MMA governor calls for courageous cuts at third Maldives Finance Forum

The third Maldives Finance Forum was opened with the Governor of the Maldives Monetary Authority (MMA) Dr Azeema Adam calling upon stakeholders to take more courage in reducing government expenditure.

“There needs to be a change particularly with regards to disorganised subsidies, and revenue needs to be increased,” Dr Azeema was reported to have told attendees.

“But that is not something the government alone could do. It should be done together by many.”

Azeema’s comments echoed the findings of the MMA’s 2013 macroeconomic report, which warned that further “slippages” in revenue or spending would undermine medium-term debt sustainability,with adverse effects on exchange rate and prices.

The third Maldives Finance Forum took place today at Bandos Island Resort, focusing on the issue of international financial and capital markets, and financial literacy.

Organised by the Maldives Pensions Administration Office (MPAO), the event sought to bring together leaders from the political, academic, financial, and social sectors to share ideas for the further development of the Maldivian financial sector.

Also speaking at today’s forum were Head of Official Institutions at Schroders Gavin Ralston, Global head of the JP Morgan’s Islamic Finance practice Dr Hussain Hassan, Minister of Economic Development Mohamed Saeed, and leading figures from the Maldivian business community.

Among the forum’s stated objectives the identification of legal and regulatory impediments to development, the promotion of financial literacy among the public, and awareness raising of the potential of the country’s pension fund.

The pension fund – overseen by the Capital Market Development Authority (CMDA) – is currently in need of diversification, CMDA CEO Fathimath Shafeega recently told Minivan News

“As you know the pension system in Maldives has assumed that there will be a developed capital market. The development of the capital market has not kept pace with the pension development,” she explained .

Beginning in March this year, the government more than doubled the monthly pension – with head of the Cabinet’s Economic Council Ahmed Adeeb stating that “innovative” investment would prevent the need to divert funds from within the current budget.

The CMDA’s quarterly report last week for the first time featured details of the country’s nascent Islamic Capital Markets, indicating the rapid growth of Shariah-based financial products in the country in recent years.

Shafeega expressed confidence that the Maldives was well positioned to become an international centre of both Islamic and non-Islamic finance in future years – the evolution of both these areas was discussed by touched Mr Ralston and Dr Hassan, respectively, at Bandos today.

Today’s speech from the economic development minister discussed issues faced in attracting foreign investment and finance – something the current government has made a priority, organising a landmark foreign investment forum in Singapore last month.

The ensuing panel discussion at today’s forum concerned accessing global financial markets and securing foreign investments.

During the recent investment forum in Singapore, President Abdulla Yameen announced his intention to create “a resilient, diversified high income economy in the next decade.”

The government was committed to exploring “openings for increasing foreign investment flows to non-traditional sectors to lift Maldives beyond the image of a picturesque postcard,” said Yameen.

The current economy relies on the tourism industry for an estimated 80 percent of GDP.